Health Savings Account

1. Health Savings Account

2. What is a High Deductible Health Plan/Health Savings Account(HDHP/HSA)? • An HSA is a tax-exempt savings account designed to save money to pay for your qualified health care expenses • It works in combination with a High Deductible Health Plan (HDHP) • A HDHP has a higher annual deductible • Typically, you will pay for all your medical expenses up to the deductible. The only exclusion is preventive care. • Preventive care is covered 100%, without paying the deductible, when received from an in-network provider • Once you have met your deductible, all expenses are covered 100%, after you pay the applicable co-pay • The district will contribute $100 per month into your individual Health Savings Account (accumulate $1,200 by the end of the year, leaving the employee portion of the deductible - $1,500) • The deductible for 2020 will be $2,800 for an individual and $5,600 for a family .  

3. HSA Bank Account • When you choose a HDHP, you will open an HSA account with OPTUM bank. This is a virtual bank that is connected to your HSA account. (This will be done during Open Enrollment) Your account will accept deposits by Kirkwood School District and you, if you choose to do so. • The funds are used to pay for qualified medical expenses, including eligible dental and vision expenses. If you use the funds for non-qualified expenses, you would pay taxes on the money withdrawn, plus a 20% tax penalty. • All contributions are tax free, via payroll deduction. The funds may earn interest, which is also tax free. • The HSA bank account is your account to keep, wherever you go. When you leave KSD for another job, or retirement, the money that you have in your HSA is yours and you will continue to use it for medical expenses, even if you are not covered by the Kirkwood School District insurance plans. It is not a “Use It Or Lose It” plan like the Flex Spending Account. • Your HSA is funded with employer money and employee money, if you wish to contribute.

4. Rate Comparison Cost to employee: Monthly Premium HDHP/HSAKSF Annual Savings • Child $344.00 $516.60 $2,071.20 • Spouse $405.00 $584.85 $2,158.20 • Family $749.00 $1,101.45 $4,229.40

5. Maximum Annual HSA Pre-Tax Contributions for 2020 Single - $3,550* Employee w/Spouse - $7,100* Employee w/Child - $7,100* Family - $7,100* Anyone on the plan, 55 years and older, can contribute an additional $1,000 under the catch up provision *Need to include the District’s contribution of $1,200 in the maximum

6. Why would I want to have an HSA if the Kirkwood Self-Funded Plan only has a $500 deductible and I do not have to pay a premium? • Tax-free deductions to your HSA account, if you choose, up to the IRS annual maximum • Lower monthly premium for dependents (spouse & children) • Tax-free withdrawals for qualified medical expenses for employee, spouse or dependent(s), even if the spouse or dependent(s) are not covered by the HSA • Tax-free earnings on dollars accumulated in the HSA • You own the HSA account. If you change jobs, retire, etc., the money stays with you • The district will deposit $1,200 annually into your HSA to help off-set the deductible • No “use it or lose it” rules like in a FSA (Flexible Spending Account)

7. YOU MAY NOT PARTICIPATE IN AN HSA IF: • You are enrolled in any Medicare plan (Part A, B or D) • You enroll in a FSA (Flexible Spending Account) for Medical Reimbursement along with the HSA. Dependent Care reimbursement accounts are permissible • You are claimed as a dependent on another person’s tax return (possibly a parent’s tax return if you are under the age of 26) • You have other medical coverage (double covered, perhaps through a spouse or parent)

8. EXAMPLE 1 Employee only • Deductible ……………………………. ………………...................... $2,800  KSD will contribute $1,200 Into your Health Savings Account Employee elects $0 contribution into HSA account • Co-insurance after Deductible and Co-pay ……......................... 100% • Preventive Care ……………………………………………………. 100% • Office Visit for annual physical ……………………………............ You would pay $0 • Total Out-of-Pocket Expense for Year ……………………. ………. $0 • Balance in your HSA account on 12/31/20…………………………. $1,200

9. EXAMPLE 2 Employee only • Deductible …………………………………...................... $2,800  KSD will contribute $1,200 Into your Health Savings Account Employee elects $0 contribution into HSA account • Co-insurance after Deductible and Co-pay ……......... 100% • Preventive Care ………………………………………… 100% • Office Visit for sick visit (cost $50) ……………………… You would pay $50 • ER visit (cost $500) ……………………………………… You would pay $500 • Prescription for antibiotic (cost $23) ……………………. You would pay $23 • Total annual medical expenses …………………………. $573 • Total Out-of-Pocket Expense for Year ………………… $0 (because KSD contributed $1,200 into your HSA) • Balance in your HSA account on 12/31/20 …………………………. $627

10. EXAMPLE 3 Employee only • Deductible …………………………………...................... $2,800  KSD will contribute $1,200 Into your Health Savings Account Employee elects $0 contribution into HSA account • Co-insurance after Deductible and Co-pay ……........... 100% • Preventive Care ………………………………………….. 100% • Office Visit for sick visit (cost $50) ………………………. You would pay $50 • ER visit (cost $500) ………………………………………. You would pay $500 • Inpatient hospital stay (cost $10,000) …………………. You would pay $2,550 (remaining $2,250 deductible + $300 hospital co-pay) • Generic Prescription for antibiotic (cost $23) ………….. You would pay $10 co-pay • Total annual medical expenses …………………………. $3,110 • Total Out-of-Pocket Expense for Year …………………. $1,910 (because KSD contributed $1,200 into your HSA) • Balance in your HSA account on 12/31/20……………………………… $0

11. EXAMPLE 4 Family coverage • Deductible ………………………………................. $5,600 ($2,800 individual, up to $5,600) KSD will contribute $1,200 Into your Health Savings Account Employee elects $0 contribution into HSA account • Co-insurance after Deductible and Co-pay ……........... 100% • Preventive Care ………………………………………….. 100% • Office Visit for annual physical Employee………………. You would pay $0 • Office Visit for annual physical Spouse………………..... You would pay $0 • Office Visit for annual physical Child #1………………..... You would pay $0 • Office Visit for annual physical Child #2………………..... You would pay $0 • Total Out-of-Pocket Expense for Year …………………… $0 • Balance in your HSA account on 12/31/20 ……………………………. $1,200 You have saved $352.45 per month on the family premium, or $4,229.40 annually

12. EXAMPLE 5 Family coverage • Deductible ………………………………............. $5,600  ($2,800 individual, up to $5,600) KSD will contribute $1,200 Into your Health Savings Account Employee elects $0 contribution into HSA account • Co-insurance after Deductible and Co-pay …….......... 100% • Preventive Care ………………………………………… 100% • Office Visit for sick child #1 visit (cost $50) …………. You would pay $50 • Office Visit for sick child #2 visit (cost $50) …………. You would pay $50 • ER visit for Employee (cost $500) ………………………. You would pay $500 • Prescription for antibiotic (cost $23) …………………….. You would pay $23 • Out-patient surgery for Spouse (cost $5,000) ………….. You would pay $2,950 ($2,800 deductible + $150 out-patient co-pay) • Total annual medical expenses ……………………… $3,573 • Total Out-of-Pocket Expense for Year …………………. $2,373 (because KSD contributed $1,200 into your HSA) • Balance in your HSA account on 12/31/20 ……………………………. $0 You have saved $352.45 per month on the family premium, or $4,229.40 annually. Even with the out-of-pocket expense incurred, you still saved $1,856.40 for the year

13. EXAMPLE 6 Family coverage • Deductible ………………………………..............$5,600 ($2,800 individual, up to $5,600) KSD will contribute $1,200 Into your Health Savings Account Employee elects $0 contribution into HSA account • Co-insurance after Deductible and Co-pay ……............ 100% • Preventive Care …………………………………………… 100% • Office Visit for sick child #1 visit (cost $50) ……………… You would pay $50 • Prescription for antibiotic (cost $23) …………………….. You would pay $23 • ER visit for Employee (cost $500) ………………………. You would pay $500 • Hospital Stay for Employee (cost $50,000) …………….. You would pay $2,600 (remaining $2,300 deductible + $300 hospital co-pay) • Out-patient surgery for Spouse (cost $5,000) ………….. You would pay $2,877 (remaining $2,727 deductible + $150 out-patient co-pay) • Total annual medical expenses ……………………… $6,050 • Total Out-of-Pocket Expense for Year ………………….. $4,850 (because KSD contributed $1,200 into your HSA) • Balance in your HSA account on 12/31/20………………………………. $0 You have saved $352.45 per month on the family premium, so you have spent $620.60 for the year

14. How do I use my HSA at the doctor’s office? • Show your insurance card so the claim will be filed with UHC. UHC will process the claim, apply the network discount and credit the deductible. Your claims will be processed toward the deductible in the order in which they are received, not necessarily by the actual date of service. • You will receive an Explanation of Benefits (EOB) from UHC, either via mail or electronically via www.myuhc.com The EOB explains how the claim was paid. Your doctor will also receive the claim information. • You may receive a bill from your doctor if you owe anything for your visit after UHC has processed the claim • You can pay your bill by using the funds in your HSA, by using your HSA debit card

15. How do I use my HSA at the pharmacy? • Show your insurance card to the pharmacist so the prescription can be run through UHC • The pharmacist will be able to confirm if there is any out-of-pocket expenses for the prescription • You can pay for your prescription bill by using the funds in your HSA, by using your HSA debit card • RX ‘n Go – order generic prescriptions with no co-pay, after deductible is met

16. KEEPING RECEIPTS AND PAYING BILLS • No claims submission is required for the HSA • You MUST keep your own receipts as proof that your purchases were eligible expenses, in case of an IRS audit • You may use your HSA debit card or optional checks to pay for eligible expenses directly to the provider • You may save your bills for years and pay yourself back in the future, once your account has grown in value, provided all receipts are dated since account opening date • If you use the money in this account for a non-qualified health expense, you will pay a 20% penalty and tax. (At age 65, you can use the money in the account for any purchase, however if it is used for a non-qualified health care expense, you will pay tax on the purchase)

17. Decision??? • Visit the HR webpage • All Plan Summaries • Visit www.myuhc.com